Pension and medical retirement benefits for UC faculty and staff will be much the same as those offered now, but employees may have to pay more and work longer to get them, if options presented by the Post-Employment Benefits Task Force are implemented.

Task force representatives laid out the options at two-dozen forums at all UC locations in April and May. The schedule included two forums at UC Davis on April 19, one on the Davis campus, the other on the Sacramento campus.

The task force has been charged with developing options for balancing the long-term costs of post-employment benefits with the need to provide competitive compensation to faculty and staff. President Mark G. Yudof is due to receive the task force recommendations in June, and determine which ones he will bring forward to the Board of Regents.

"Task force surveys conducted in February confirm that faculty and staff have made a conscious choice to work at UC because of the retirement benefits, and they place a high value on those benefits," said Dwaine Duckett, vice president of UC Human Resources. "Our retirement benefits stand out among our competitors, and we want to keep that edge, but we must make some rational adjustments in order to sustain them."

Many of the changes under discussion would affect future hires, while people who are already on the payroll could see a faster ramp-up of contributions to the UC Retirement Plan and higher premiums for retiree health insurance, especially for those who retire before they are eligible for Medicare at age 65.

Overall, the range of options that the task force is considering is consistent with feedback from faculty and staff, Duckett said.

Options for pension benefits

Gary Schlimgen, director of Pension and Retirement Programs, said the task force will recommend levels of employer and employee contributions to the UC Retirement Plan for fiscal year 2011-12 and beyond, with a possible target of 5 percent or more for employees. The task force also will make a recommendation about how quickly employee contributions should rise to that 5 percent level, he said.

UCRP members and UC started contributions of roughly 2 percent and 4 percent, respectively, effective with April earings.

Future employees could see changes to the minimum retirement age and the maximum retirement benefit. "Should we consider Social Security benefits when we look at the maximum UCRP benefit? Should we try to encourage faculty and staff to retire later? These are among the questions the task force is discussing as it studies options for recommendations," Schlimgen said.

The medical centers have also asked the task force to consider offering a defined contribution plan with an employer match, which is more commonly available at competing institutions. If the task force recommends that option, then the task force also would consider whether to make the same option available to other faculty and staff.

Retiree health insurance

UC pays a larger percentage of retiree health benefit costs than many other California employers. Given the rising cost of health insurance and severe budget pressures, UC cannot continue with such high contribution levels.

The task force is discussing such options as phasing in a reduced employer contribution to retiree health premiums. Today, UC contributes, on average, 89 percent of the premium cost for retiree medical insurance.

Recent studies show UC's retiree health benefits are 200 percent to 300 percent higher than those for comparator institutions and markets.

"When we are that much above market, it makes sense to reallocate some of the resources to other areas, such as salaries where we may be behind," Duckett said.

The presenters assured faculty and staff that any recommendations would include provisions to mitigate the impact on those long-term employees who chose not to coordinate with Social Security and, therefore, are not eligible for Medicare.

The task force also is considering an Academic Senate proposal to issue pension obligation bonds as a way to finance a portion of the pension contribution shortfall, said Peter Taylor, UC executive vice president and chief financial officer. Pension obligation bonds have pluses and minuses, which the finance work team of the task force is studying, he said.

For represented employees, any of the proposed options are subject to collective bargaining.

On the Net

The Future of UC Retirement Benefits

The forum presentation and a report on the results of the task force survey on post employment benefits are due to be available on the website in May.

Anne Wolf is systemwide coordinator in Internal Communications at UC Office of the President.